Search
Menu

Social Security

Social Security (SS) is a federal benefits program that provides supplemental income for qualified retired adults and their spouses, those whose spouse or qualifying ex-spouse has died, and people with certain disabilities. SS can sometimes support the children of beneficiaries.

SS is funded by social security taxes in the form of payroll taxes as laid out in the Federal Insurance Contributions Act and the Self Employed Contributions Act (for self-employed individuals). The current payroll tax rate for Social Security is 6.2% for the employer and 6.2% for the employee (12.4% if you’re self-employed). The maximum amount of earned income that is subject to social security taxes is $160,200 in 2023.

The taxes are collected by the Internal Revenue Service and put into the Social Security Trust Fund. The money is then invested and the interest is used to pay out benefits to eligible retired seniors and their spouses. This trust is made up of two separate funds:

United States (US) citizens and nationals of the US living in the US or citizens in the military can qualify for two additional programs available from the Social Security Administration.

  • The Supplemental Security Income (SSI) program benefits older adults and adults of any age with blindness or a qualifying total disability with very limited income and resources.
  • The Social Security Disability Insurance (SSDI) program benefits individuals with disabilities who have a qualifying work history, either through their own employment or a family member.
  • It is possible to qualify for both programs.
  • If you receive SSI and/or SSDI you may be able to work without it impacting your benefits if you earn less than $1,470 ($2,460 if you are blind) a month in 2023. You can find all the details in Working While Disabled: How We Can Help (PDF).

SS programs help keep 16,000,000 seniors and 1,000,000 children out of poverty.

Social Security Benefits

Social Security (SS) is an earned benefit for retirees who have paid enough social security taxes to qualify them and their spouses.

The Social Security Administration (SSA) keeps track of your earnings throughout your working career.

Currently, you qualify for full Social Security (SS) if you have accumulated 40 quarters or “credits” from covered wages.

  • Individual credits are awarded for each interval amount accumulated, an amount that is determined by the year in which it was earned, and adjusted annually to keep up with inflation. For example: in 2022 one credit is awarded for each $1,510 earned and for 2023 the interval will be $1,640.
  • The maximum number of credits you can earn in a year is four, meaning you must have worked for at least ten years before qualifying for SS. 

Here’s how your monthly benefit is calculated.

Full retirement age is currently 66 years and 4 months old. This will slowly increase and reach a maximum of 67 years old in 2027 — USA.gov. Retirement Age Calculator.

  • In 2023, the maximum monthly SS payment for workers at full retirement age is $3,627 ($43,524 for the year). The benefits currently increase with the cost of living.
  • Your benefit will be less if you begin collection before full retirement age, minimum age 62 years old. It will be 8% higher each year if you begin collection after full retirement age, although the increases stop at 70 years old.
  • The benefits will continue at that level for the rest of your life.
  • It may be possible to do a breakeven calculation to determine what the best age to begin benefits is based on your life expectancy.
    • For example, if your average indexed monthly earnings indicate your benefit could be $1,500 a month if you start at age 62 vs $2,000 a month at age 66, you break even at about 77 years old, after which the higher monthly benefits that you’d get as a result of waiting will begin to pay off; or
    • If your family history suggests that you may live much longer, you may want to consider calculating the long-term benefit of waiting until you are 70 years old before collecting your benefit.
  • If you are not yet at your full retirement age and you return to work, even part-time, your Social Security benefits will decrease until the month when you become fully eligible.
    • In 2023 the reduction is $1 for every $2 of earned income over $21,240 and $1 for every $3 in income over $56,520.
    • The withheld benefits will be credited to your record and increase your benefit when you do reach your full retirement age. 
  • SS benefits are not reduced by income from interest, annuities, capital gains, investment earnings, non-government pensions, and other government benefits.
  • Unless you have paid Social Security taxes on 30 years of substantial earnings, your government pension may reduce your SS benefits (The Windfall Elimination Provision). 

You can use the official SSA Online Benefits Calculator to determine your SSI benefits.

Spouses

Spouses can collect SS under three circumstances
  1. Your spouse can collect SS based on their own status as a qualified retiree.
  2. If your spouse does not qualify for SS they can receive benefits while you are alive that are 50% of your benefits. The amount will be lower if benefits begin between 62 years old and the full retirement age, but will not increase if benefits start after this age.
  3. After your death, your surviving spouse is entitled to receive the higher of their own benefit or your benefit — even if they did not qualify for SS.
    1. If they have yet to reach their full retirement age, they will be entitled to prorated  survivor benefits starting at 60 years old.
    2. Once they reach full retirement age, they are entitled to 100% of your benefit or their own benefit, whichever is higher.
    3. If your spouse was born before January 2, 1954 they may be able to file a restricted application that allows them to claim spousal benefits while delaying their own benefits up to age 70.
If you and your spouse were married for 10 years or more before you were divorced and your spouse has not remarried they are entitled to collect both the spousal benefit and the spousal survivor benefit. Your surviving spouse can receive a special lump-sum death payment of $255 if they meet certain requirements.
  • They were living in the same household as you when you died.
  • If you were living apart, your surviving spouse can still receive the lump-sum if, during the month you died, they:
    • Were already receiving benefits; or
    • Became eligible for benefits upon the worker’s death.
If your surviving spouse is eligible, but not currently receiving benefits, they must apply for this payment within 2 years of your death.

Children

Children can receive survivor benefits under the Social Security Child’s Insurance program. In some cases, a stepchild, grandchild, step-grandchild, or adopted child may also qualify for children’s benefits. To qualify for this program, the child must be unmarried, dependent on you, and:

  • Younger than 18 years old;
  • Aged 18-19 years and a full-time high-school student; or
  • 18 years old or older with a disability that began before 22 years old.

If your spouse has died, your child may receive the special lump-sum death payment of $255 if during the month you died they:

  • Were already receiving benefits; or
  • Became eligible for benefits upon your death.
  • If the eligible child is not currently receiving benefits, they must apply for this payment within 2 years of your death.

Taxing Social Security

Although the Social Security Trust Fund is funded by payroll taxes, SS benefits beyond the first 15% are subject to income tax, depending on your combined income.
  • The Social Security Administration (SSA) defines your combined income as the sum of your adjusted gross income, nontaxable interest (such as the required minimum distribution from your IRA or municipal bond interest), and half of your Social Security benefits.
  • If you file your federal tax return as an individual and your combined income is:
    •  $25,000 – $34,000, you may have to pay income tax on up to 50% of your benefits; or
    • More than $34,000, you may have to pay income tax on up to 85% of your benefits.
  • If you’re married, filing a joint return, and your combined income is:
    • $32,000 – $44,000, you may have to pay income tax on up to 50% of your benefits; or
    • More than $44,000, you may have to pay tax on up to 85% of your benefits.
Currently Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, and West Virginia tax SS benefits. Benefits received due to disability are not taxed as income. Any dependent or survivor benefits that go to your child are not considered income. 

Supplemental Security Income

Supplemental Security Income (SSI) is an additional program available from the Social Security Administration that provides basic financial assistance to qualified adults who have or live in households that have very limited income and resources, including:

  • Adults that are at least 65 years old;
  • Adults of any age with blindness or qualifying total disability; or
  • Children with physical or mental condition(s) that very seriously limits their daily activities for a period of 12 months or more or may be expected to result in death.

The average monthly benefit was $622 for December 2022 and the maximum monthly benefit for 2023 is:

  • $914 for an eligible individual;
  • $1,371 for an eligible individual with an eligible spouse; and
  • $458 for an essential person. 

State programs may supplement federal SSI benefits and automatically provide health care coverage through Medicaid.

Social Security Disability Insurance

Social Security Disability Insurance (SSDI) is an additional program available from the Social Security Administration that supports adults younger than retirement age who are disabled and have a qualifying work history, either through their own employment or a family member (spouse/parent). To qualify for SSDI benefits, you must:
  • Have worked in jobs covered by Social Security; and
  • Have a medical condition that meets the following strict definition of disability.
    • You cannot do work and engage in substantial gainful activity because of your medical condition.
    • You cannot do work you did previously or adjust to other work because of your medical condition.
    • You do not have a partial disability and your condition has lasted or is expected to last for at least 1 year or to result in death.
The SSA usually pays monthly benefits if you are unable to work for a year or more because of a qualifying total disability.
  • The average monthly benefit was $1,688 for December 2022.
  • The maximum monthly benefit for 2023 is $3,627.
  • There is a 5-month waiting period with benefits beginning the sixth full month after the date your disability began.
  • Benefits may be paid retroactively for as many as 12 months before you apply if the SSA finds you had a disability during that time and you meet all other requirements.
  • Benefits usually continue until you can work again on a regular basis. There are also several special rules called work incentives that provide continued benefits and health care coverage to help you make the transition back to work.
If you are receiving SSDI benefits when you reach full retirement age, your disability benefits automatically convert to retirement benefits, but the amount remains the same. Beneficiaries of SSDI will automatically qualify for Medicare after 24 months of receiving disability payments — individuals with amyotrophic lateral sclerosis (ALS) are eligible for Medicare immediately.

Resources

You can also get information about all Social Security programs and applying for them by visiting your local Social Security office or by calling 1-800-772-1213 (TTY 1-800-325-0778) between 7 a.m.-7 p.m. Monday through Friday. You can also use these to report a death to the SSA. 

Close Menu